Implications: Housing starts bounced back in November adding to the wide array of data undermining the case for a double-dip recession. All of the gain was due to single-family starts, which are up in 3 of the past 4 months. Multi-family starts fell again in November for the fourth month in a row, but it's important to remember that multi-family starts are extremely volatile from month to month. Despite the drop in November, the 12-month moving average for multi-family starts is still in a rising trend. Meanwhile the demand for multi-unit dwellings will continue to increase due to ongoing foreclosures and the rise in rental occupancy. As a result, we anticipate a very large rebound in multi-unit construction over the next couple of months. Although excess housing inventories remain, they are dropping rapidly and will continue to decline even in the face of a substantial recovery in home building. True, many former "homeowners" (we use that term loosely after an era of zero down payments) are becoming renters, but rental properties require construction too. When you hear stories about a "wave of foreclosures" lifting inventories, remember that when someone leaves their home to rent somewhere else that overall housing inventories do not change. In other news this morning, new claims for unemployment insurance fell 3,000 last week to 420,000. Continuing claims for regular state benefits increased 22,000 to 4.135 million. Also in other news this morning the Philadelphia Fed index, a measure of manufacturing in that region, increased to 24.3 in December from 22.5 in November. The consensus had expected a decline to 15.0.
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Posted on Thursday, December 16, 2010 @ 10:15 AM
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